WTO Negotiations Could Miss Deadline
on Agriculture Snag

SCOTT MILLER / Wall Street Journal 18mar03

BRUSSELS -- The World Trade Organization's current round of trade talks, already behind schedule on several fronts, appears headed for its biggest setback yet: missing a key deadline for agreement on agricultural liberalization.

Agriculture is widely viewed as the linchpin of the Doha Round of talks. Many poor countries complain that their rich counterparts spend $1 billion a day on trade-distorting subsidies, and they say freeing up farming is one of the best ways to help emerging economies. What's more, developing countries are reluctant to make trade concessions in areas important to rich nations until they feel that the agricultural playing field is leveling.

HELPING HAND

Public support per full-time farmer, in thousands of dollars for 2001*

Switzerland	$27 
Japan 		$23 
US 		$20 
Canada 		$9 
Australia 	$2

* As measured by gross transfers from consumers and taxpayers to support agricultural producers.
   Source: OECD's Producer Support estimates

The standoff looks likely to prevent WTO negotiators from meeting a March 31 deadline for agreeing on a broad framework for agriculture talks. Indeed, chief WTO agriculture negotiator Stuart Harbinson is to release a consensus-seeking report this week that is expected to show scant progress. "It's going to be a tall order based on what we are hearing from some of our trading partners," said Canada's ambassador to the WTO, Sergio Marchi. "We will keep our eyes fixed on March 31, and see where things stand on April 1."

Mr. Marchi and others worry that failure to meet the deadline will be another step down a slippery slope for the WTO. Unable to strike agreements in December on medicines or preferential treatment for poor countries, the Geneva-based body faces numerous unresolved issues that could complicate a meeting of the world's trade ministers in Cancun, Mexico in September.

Broadly speaking, the agriculture talks pit a group of countries that favor radical liberalization -- among them the U.S., Canada and Australia -- against the European Union, Japan, Switzerland and Norway, which heavily subsidize their farm sectors and favor slower reform.

The farm talks got off to a bad start last month. Before Mr. Harbinson even unveiled a draft proposal to get negotiations rolling, the EU had circulated a critical response, saying the proposal required more concessions from the 15-nation bloc than from the U.S. Agricultural exporters attacked the proposal as too weak, saying it would allow Japan, for example, to retain steep import tariffs on rice.

So far, trade negotiators say, it is hard to find a single area where there has been meaningful progress within the three main areas of the talks: market barriers such as tariffs and quotas, export issues such as subsidies and food aid, and -- perhaps the most contentious -- domestic supports meant to help farmers in their home markets. As the talks proceed, tempers are starting to fray. WTO insiders say Director General Supachai Panitchpakdi has several times been visibly unable to restrain his frustration.

Some are turning on the WTO process itself. EU Trade Commissioner Pascal Lamy, for example, attacked last month's draft as too detailed, saying it should have laid out only rough guidelines for talks. "The situation is getting rather difficult, to put it mildly," said Kare Bryn, Norway's WTO envoy. "In many ways, what has happened during so-called negotiations is that they haven't been negotiations at all."

The biggest obstacle hanging over the talks is the EU's Common Agricultural Policy, which stipulates what the bloc spends on agriculture and thus limits negotiating room. What's more, the EU policy is in for sweeping revisions this summer. That could give the EU more room on agriculture, but tends to stymie WTO agriculture talks for now.

All the while, faith in the WTO may be weakening. Some in the U.S., frustrated by Europe's refusal to allow imports of genetically modified crops, are asking if the WTO is necessary. House Ways and Means Committee Chairman Bill Thomas said last month that if the EU doesn't liberalize its farm sector, there would be strong support for leaving the WTO when lawmakers vote on renewing U.S. membership in 2005.

"It's like a poker game right now," said Philippe Bruno, a trade lawyer at law firm Dorsey & Whitney in Washington. "When you start a poker game, you don't want to show your cards."

-- Michael Schroeder contributed to this article.